Let's talk about new construction loans with Groundfloor.
Learn more with some of Groundfloor’s frequently asked questions.
Just the drawn funds
Yes, we require the permit to be in hand, however we can consider a land only loan to help you secure the property during the permitting process
While you don’t need to show experience in new construction, you need to show 4+ experience over the past 5 years of either rehabs or rentals.
Can you do development loans? No, we do not have funding mechanism for horizontal build costs. Ideally we look for infill scenarios.
First. What is it? A new construction loan is a type of financing designed specifically for individuals or businesses looking to build a new structure or remodel an existing one by taking it down to the foundation. This loan offers interest only on disbursed funds, as well as our deferred payment program.
Our new construction loans operate slightly differently than our renovation loans. Borrowers must have the experience to be eligible. Minimum of 4 transactions in the last 5yrs. These can be flips, rentals, or new construction. The loans fund different percentages of the construction based on the tier in which the borrower falls. We also tend to grab additional documents for this type of loan. This would include 1 bank statement, a general contractor license, and the contract you have with your general contractor. While they are not part of the loan, we still need to confirm there is a contract in place. Once a loan is approved, the borrower is able to access the full amount of the loan in a series of draws. Interest accrues on the loan as it is used.
As is the case with all loans we offer, rates are risk-adjusted based on the creditworthiness of the borrower and the value of the collateral relative to the loan balance. In general, we have found that borrowers who take out a new construction loan are more experienced and have a greater financial capacity than a typical renovator. Furthermore, new construction overall is less risky than a renovation because it is essentially a clean slate — often with renovation projects, you run into issues that you were not expecting, whereas with new construction, you are more aware of all contingencies because you are starting from the ground up.
Finally, the current market for these types of loans is wide open — for the most part, builders have to turn to banks or larger non-bank lenders in order to receive loans for their new construction projects. True to our mission of creating a radically open, decentralized, and accessible capital market, we saw an opportunity for Groundfloor to step in and change the game.
Learn more about a few of the borrowers that have worked with Groundfloor to turn bring their project to life!
We're talking with expert leaders to hear more about how real estate entrepreneurs and investors can make a real impact in this dynamic industry.
We’re excited to introduce you to the dynamic partnership between Groundfloor Finance and RicherValues. These two companies have teamed up to bring you innovative solutions in the field of real estate investing and financial planning. As real estate professionals, we understand the importance of understanding the value of a property before making an investment and how it can impact the potential return on investment.